Murata has adopted the board of statutory auditors system.The Board of Directors comprised 10 directors (2 from outside the Company) as of June 28, 2007. In adadition, the Company has 5 statutory auditors (3 from outside the Company).

To further reinforce supervisory and operational functions, Murata has introduced a system of vice presidents. The Board of Directors focuses on making dicisions on management policies and critical business operations, as well as monitoring the performance of the Statutory Representative Directors. The Vice Presidents are responsible for management of day-to-day business operations.

Murata has also established the Executive Conference, composed of Statutory Representative Directors, and other directors who occupy Senior Vice President positions or above, as a deliberative body to assist the Board of Directors and Statutory Representative Directors in their decision-making.

Auditing policies and plans are set by the Board of Statutory Auditors. Based on these guidelines, Statutory Auditors attend Board of Directors' meetings and other important meetings. Statutory Auditors are further responsible for inspecting the operations and finances of the Company and auditing the performance of Directors from the standpoint of legal compliance and adequacy.

In addition, an organizationally independent internal auditing department (the Office of Internal Audit) controls audits by each Head office functional department, such as the General Administration, Personnel and Accounting departments). The statutory auditors and the Board of Statutory Auditors exchange viewpoints with the Office of Internal Audit, present the board's auditing policies and plans to the office, and receive reports on internal auditing plans, implementation and other matters concerning the internal auditing system. A close working relationship is maintained between all parties in an effort to ensure audit efficacy.

The Internal Control Committee was established as an advisory body to the President for the purpose of the maintenance and continuous improvement of the system for assuring appropriateness of operations (Internal Control System).

This committee collaborates with related divisions regarding response to the Japan SOX Law(Financial Instruments and Exchange Law of 2006) to maintain and continuously improve the Group's Internal Control System to assure the reliability of financial reporting.

Murata holds internal control presentations meetings at all Group companies and publishes related articles in in-house newsletters to raise the awareness of corporate officers and employees.

We carry out internal control system training on a daily basis at such Head Office functional staff department as the General Affairs, Personnel and Accounting department, and plan to establish a unique education program for corporate officers and employees in preparation for the 2008 enactment of the Japan SOX law (Japanese version of the US Sarbanes Oxley Act).

The Company is encouraging auditing staff to participate in external seminars relating to the internal control system to raise the level of Murata's internal audits. Using these opportunities in a positive, motivated way accomplishes a degree of learning outcome, but a key future issue is the establishment of systematic in-house training systems. We are encouraging to train internal auditing staff while establishing and developing internal control systems.